Seven Nigerian banks and two bank holding company Long-Term Issuer Default Ratings (LT IDRs) would likely be upgraded if Nigeria’s sovereign LT IDRs (B-/Positive) were upgraded and the entities maintained stable financial profiles.
According to Fitch Ratings, the Positive Outlooks on the entities’ ‘B-’ LT IDRs mirror that on the sovereign.
The entities are Access Bank, Zenith Bank, First HoldCo, First Bank of Nigeria, United Bank for Africa (UBA), Guaranty Trust Holding Company (GTCO), Guaranty Trust Bank (GTB), Fidelity Bank and Bank of Industry (BOI).
The IDRs, except for BOI’s, are driven by standalone creditworthiness, expressed by Viability Ratings (VRs). The VRs are primarily constrained by high exposure to the sovereign through holdings of sovereign debt securities and large cash reserves at the Central Bank of Nigeria.
The UK-based firm said Zenith, UBA and GTCO/GTB’s VRs are one notch below the ‘b’ implied VRs due to operating environment and sovereign rating constraints, which could ease if Nigeria’s LT IDRs were upgraded. The other banks’ VRs are in line with their implied VRs.
Fidelity has a smaller franchise than the other domestic systemically important banks but has more than doubled its paid-in capital since end-3Q24 through capital raising.
It is now raising more capital to meet the increased minimum paid-in capital requirement that takes effect at end-1Q26. The improvement in core capitalisation would support an upgrade of Fidelity’s VR and LT IDR if the sovereign were upgraded.
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